Xcite Energy Limited: US$140 Million Raised Through Issue of Senior Secured Bond and Issue of New Shares

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

TSX-V: XEL; LSE: XEL

16 June 2014

Xcite Energy Limited
("Xcite Energy" or the "Company")

US$140 Million Raised through Issue of Senior Secured Bond and Issue of New Shares

Xcite Energy is pleased to announce the successful placing of US$140 million through the placing of senior secured bonds (the "Bonds") issued by its 100% UK subsidiary Xcite Energy Resources Limited ( "XER") and a private placement of shares in the Company (the "Shares") to new investors.

The net proceeds from the bond issue (the "Bond Issue") and the private placement of Shares (the "Share Issue") will be used to refinance the US$ 80 million, 12.5% unsecured loan notes, due 25 December 2014 plus accrued interest and related obligations, to service interest payments under the Bonds, to fund the Bentley field development work programme through this year, prior to submission of the field development plan, and for general corporate purposes.

The Bonds have a term of two years and a cash interest coupon of 12% p.a., payable quarterly in arrears. In addition, the Bonds have a 3% p.a. payment in kind ("PIK") interest coupon accruing and compounding annually, which can be paid through the issuance of additional Bonds or in cash at XER's discretion. The Bonds will be issued at 90% of the face value and subscribers for the Bonds have also subscribed for 11,616,875 Shares (the "Subscription Shares"), at a price of 68.5 pence per Share, being the closing price of the Shares on AIM on Friday, 13 June 2014, and being an amount equal to the remaining 10% of the face value of the Bonds.

In addition, a subscriber in the Bond Issue has subscribed for an additional 4,302,546 Shares (the "Placed Shares") at a price of 68.5 pence per share for gross proceeds of US$ 5 million, to provide an aggregate gross proceeds from the Bond Issue and the Share Issue of US$ 140 million.

The settlement date for the Bonds is expected to be 30 June 2014 (the "Settlement Date"). The Bond is callable at the option of XER at any time with a call option premium during the first year after the Settlement Date comprising the present value on the relevant record date of 106.5% of par value; plus the present value of the remaining coupon payments (less any accrued interest) for the first year after the Settlement Date and accrued interest on the redeemed Bonds. During the second year after the Settlement Date, the call option premium comprises 106.5% of par value and any accrued interest on the redeemed Bonds.

The Bonds are secured over the assets of XER, including its interest in the Bentley field, as well as through the provision of a guarantee from the Company. As part of the issuance of the Bonds, XER will cancel its existing reserves based lending facility ("RBL") which was based on the Bentley field development plan in place prior to the pre-production well test in 2012. The use of an RBL facility that would be applicable for the current field development plan remains part of the Company's financing options for the future.

Rupert Cole, CEO of Xcite Energy commented:

"This new financing package comes at an important time for the Company as we focus on delivering a technically and financially compliant field development plan for Bentley. It provides us with a stable platform to continue our planned activities this year, allowing us to further optimise the development plan and work towards completing contract negotiations with our partners. The planned work programme will also provide a greater level of cost and schedule definition, enabling us to develop the longer term financing needed for the first phase development of the field, for which we shall continue to evaluate a number of options including asset financing, reserves based lending and additional development partners."

Pareto Securities has acted as the Sole Manager and Bookrunner of the Bond issue.

Additional Information

The closing of the Bond Issue and Share Issue is subject to final approval from the TSX-V. Except in accordance with Canadian securities laws, the Shares issued in connection with this transaction may not be sold or otherwise traded on or through the facilities of the TSX-V or except pursuant to any Canadian securities laws exemptions, to any person in Canada or otherwise into Canada until the date that is four months and one day from the date of issue. Purchasers are advised to seek legal advice prior to any resale of the shares issued in this transaction.

The settlement date of the Placed Shares is expected to be on or about 17 June 2014. Application will be made for admission to the AIM of the 4,302,546 Placed Shares, and dealings are expected to commence on or about 20 June 2014. The settlement date of the Subscription Shares is expected to be on or about 27 June 2014. Application will be made for admission to the AIM of the 11,616,875 Subscription Shares, and dealings are expected to commence on or about 30 June 2014. The Shares will rank pari passu in all respects with the Company's existing issued ordinary shares of no par value.

The fundraising is conditional on the customary condition precedents for a transaction of this nature being satisfied, including without limitation entering into the long form documentation.

Total Voting Rights

Following admission of the Placed Shares and the Subscription Shares ("Admission"), the Company's enlarged issued share capital will comprise 308,730,421 Shares with one voting right per share. There are no shares held in treasury. The total number of voting rights in the Company following Admission will therefore be 308,730,421. At Admission there will be a total of 17,250,000 outstanding warrants and 25,652,000 outstanding options to subscribe for shares.

This figure of 308,730,421 Shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the Financial Conduct Authority's Disclosure and Transparency Rules.

This press release does not constitute an offer for sale of the securities referenced herein in the United States. The securities offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States absent registration or an exemption from those registration requirements.

ENQUIRIES:

Xcite Energy Limited

+44 (0) 1483 549 063

Rupert Cole / Andrew Fairclough

Liberum (Joint Broker and Nominated Adviser)

+44 (0) 203 100 2222

Clayton Bush / Tim Graham

Morgan Stanley (Joint Broker)

+44 (0) 207 425 8000

Andrew Foster

Bell Pottinger

+44 (0) 207 861 3232

Mark Antelme / Henry Lerwill

Forward-Looking Statements

Certain statements contained in this announcement constitute forward-looking information within the meaning of securities laws, including, but not limited to, information relating to the settlement of the Bond Issue and Share Issue, and admission to AIM of the Shares. Forward-looking information may relate to the Company's future outlook and anticipated events or results and, in some cases, can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "target", "potential", "continue" or other similar expressions concerning matters that are not historical facts. These statements are based on certain factors and assumptions including expected growth, results of operations, performance and business prospects and opportunities. While the Company considers these assumptions to be reasonable based on information currently available to us, they may prove to be incorrect. Forward-looking information is also subject to certain factors, including risks and uncertainties that could cause actual results to differ materially from what we currently expect. These factors include risks associated with the oil and gas industry (including operational risks in exploration and development and uncertainties of estimates oil and gas potential properties), the risk of commodity price and foreign exchange rate fluctuations and the ability of Xcite Energy to secure financing. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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